My Diary 455 --- ZT Why the Buck Has Pluck

Thursday, Oct. 16, 2008

Why the Buck Has Pluck

By David Hale

The cost of stemming the financial crisis continues to soar. The U.S. Federal Reserve has already sunk more than $800 billion into the financial system; the Treasury Department is committed to the $700 billion bailout package in addition to the $200 billion being spent to prop up Freddie Mac and Fannie Mae; rescuing AIG may cost more than $120 billion. With the already lofty U.S. budget deficit now expected to top $1 trillion next year and recession a virtual certainty, you'd expect America's currency to be taking a beating.

Yet amid the shocking developments of the past few months, the dollar has surprisingly gained strength. It has rallied more than 16% against the euro since its trough in early July and made impressive advances against the Australian dollar, South Korea's won and other currencies. There's a fairly simple explanation for this: it's not that people want to own dollars, its just that they want to own the alternatives even less. There's certainly nothing mysterious about the dollar's recent strength against the euro. Between July 1, 2006, and July 1, 2008, the dollar lost 19% against the European currency because the Continent's economies were outpacing America's. That's changed as Europe grapples with its own banking calamities and slumping markets — hence the dollar has bounced back after a very bad run.

Less obvious is the support the dollar is getting from an unlikely quarter: global hedge funds and other nonbank financial entities. This shadow banking system has borrowed trillions of dollars to leverage its investments. But the crisis has triggered massive early loan repayments, and because these loans must be repaid in the U.S. currency, demand for the dollar has increased, driving up its value. It's not just hedge funds that are affected. Foreign banks, which hold $12 trillion in dollar assets and liabilities, are also in the process of deleveraging.

All this helps to explain why the dollar has been stronger lately. But with the U.S. Federal Reserve cutting interest rates again and the U.S. Mint running its printing presses overtime to fund rescue packages, won't the dollar tank soon? Probably not. As the Treasury Department's $700 billion bailout plan is implemented, banks should begin to be able to restructure their balance sheets and regain the capacity to make loans at interest rates that will be attractive at home and abroad. While a U.S. recession looks unavoidable, the stabilization of the financial system should allow a recovery to begin next year. That's good for the dollar, too.

But what's really good for the dollar is China, which has a couple of solid reasons to help maintain the stability of the U.S. currency. One is that China is one of America's biggest creditors; the country holds some $519 billion in U.S. Treasury bills (second only to Japan's $593 billion), and it doesn't want to see these investments eroded by a slumping dollar. In addition, China is increasingly worried that an economic slump in the U.S. and Europe will curtail its export growth, dealing the Chinese economy a serious blow. To keep the prices of its exports competitive, Beijing has reversed a policy begun three years ago that allowed its own currency, the yuan, to gradually increase in value relative to the dollar. After rising 6.4% during the first half of 2008, the yuan has been flat against the dollar since July.

Moreover, while currency markets are complex ecosystems, it seems unlikely that countries such as China and Japan that have already loaned America trillions will stop buying U.S. government debt any time soon. They have relatively few tools at their disposal to keep their economies on track other than tending to the dollar exchange rate. China recognizes it has little choice but to go on financing the ballooning U.S. budget deficit by expanding its foreign-exchange reserves from $1.8 trillion to $2.3 trillion over the next 18 months.

The message to dollar bears is clear: the grimmer the headlines are, the more misleading they can be. Selling the dollar short because of the financial crisis is not a sure bet. All economic news is relative, and right now the news is bad all over the world. Over the next several months, the greenback could even begin to look like a safe harbor in the midst of the global economic storm.

David Hale is an economist and chairman of David Hale Global Economics in Chicago

• Find this article at:
• http://www.time.com/time/magazine/article/0,9171,1850974,00.html 
  
  
  
  美國《時代》周刊10月27日(提前出版)一期發表文章，題目是“美元為什麽堅挺”，摘要如下。

      為遏止金融危機而付出的成本繼續飆升。美聯儲已向金融係統注資8000多億美元；財政部除了出資2000億美元支撐“房利美”和“房地美”之外，還實施了7000億美元的金融救援計劃；拯救美國國際集團可能耗資1200億美元以上。目前已十分龐大的預算赤字預計明年將高達1萬億美元，經濟衰退也不可避免，你有理由認為，美元也會一蹶不振。 

      然而，盡管近幾個月的事態發展令人震驚，美元卻出人意料地日益堅挺。美元對歐元比價自7月初降至低穀以來，已經回升了16%，美元對澳元、韓元及其他貨幣的比價也大幅攀升。對此有種簡單的解釋：這不是因為人們希望持有美元，而是他們更不願意持有其他貨幣。近期美元對歐元的走強並無奧秘可言。2006年7月1日至2008年7月1日之間，由於歐洲大陸的經濟狀況優於美國，美元對歐元比價降低了19%。隨著歐洲開始應對自身的銀行危機和市場不景氣的問題，比價也隨之改變，因此美元在遭到大規模拋售後又開始反彈。

  

      10月20日，在美國華盛頓國會山，美國聯邦儲備委員會主席伯南克（右）出席國會眾議院預算委員會舉行的一場關於經濟複蘇的聽證會。伯南克20日表示讚同美國國會考慮出台新的經濟刺激方案，指出經濟前景仍然非常地不確定。 新華社/路透

      另一個不太明顯的因素是，全球對衝基金和其他非銀行金融實體對美元的支撐作用。這一影子銀行係統貸款數萬億美元用於投資。然而，金融危機引發大規模提前還貸，由於這些貸款必須用美元進行償付，對美元的需求隨之增長，由此帶動美元升值。受此影響的並非僅有對衝基金。持有1 2萬億美元資產和債務的外國銀行也陷入了“去杠杆化”的循環。 

      這都有助於解釋美元近期的走強。然而，隨著美聯儲再次降息、美國鑄幣局加緊印鈔來支持救援計劃，美元不會迅速貶值嗎？也許不會。隨著財政部7000億美元救援計劃的實施，銀行應該可以調整資產負債表，並重新以能吸引國內外投資者的利率發放貸款。盡管美國的經濟衰退似乎不可避免，金融係統的穩定應該可以保證經濟在明年開始複蘇。這對美元來說也是利好消息。 

      然而，真正推動美元的是中國，以下幾個理由可以充分證明中國有助於美元的穩定：中國是美國最大的債權國之一；中國持有約5190億美元的美國短期國庫券(僅次於日本的5930億美元)，且中國不希望看到這些投資由於美元貶值而縮水。除此之外，中國也越來越擔心，美歐的經濟不景氣會遏製本國出口的增長，從而使本國經濟遭受重創。為保持出口產品價格的競爭力，中國改變了3年前開始實施的人民幣對美元逐漸升值的政策。2008年上半年，人民幣對美元匯率增長了6.4%，但7月以來一直保持平穩。 

      不僅如此，盡管貨幣市場是套複雜的係統，但中國、日本等國已向美國貸款數萬億，它們似乎不太可能在近期停止購買美國國債。除美元外，它們可用來維持經濟正常運行的貨幣工具寥寥無幾。 

      以目前的金融危機為依據來賣空美元並不可靠。在未來幾個月內，美元甚至可能成為全球經濟風暴中的避風港。